DIR.UN has been flat over the past year, but it has outperformed and held up better than the broader Canadian REITs space. We like its operations in the industrial space, which we feel have more tailwinds than other areas such as apartments and office space REITs. Its price has been flat over the past five and 10 years, but its total return has greatly outperformed the BMO Equal Weight REIT ETF (ZRE) over the past five and 10 years. Its distribution yield has come down from 10% to 5%, however, this is in-line with many REITs. It has not increased its distribution, but the free cash flow that would otherwise go to an increased distribution is instead going towards property purchases and expansion of its balance sheet.
The REIT space as a whole has suffered due to rising interest rates, but we expect as interest rates stagnate or decline in the coming years that investors will seek yield in REITs once again, REITs will grow as they take on debt to fund property purchases, cap rates will come down, causing property values on these REITs' balance sheet to reinflate, and REITs will appear inexpensive.